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FTC releases data broker report

Today, the Federal Trade Commission (FTC) released Data Brokers: A Call for Transparency and Accountability. The report is an in-depth look at issues posed by the collection and dissemination of consumer information by the data broker industry and its findings will likely be used by both sides in the debate over data broker legislation and guide future FTC regulatory and enforcement activities in this space.

In its report, the FTC states that consumers may benefit from increased transparency into the operations of data brokers. It notes that data brokers collect and store billions of data elements covering nearly every U.S. consumer, in many cases without consumers’ knowledge. The FTC recommends that Congress consider enacting legislation to make data broker practices more visible to consumers and to give consumers greater control over the handling of their information by data brokers.

The report also focuses on how this information is used. It notes that data brokers analyze the data in order to make inferences about consumers – for example, what income bracket they belong to and their age and health conditions – which can be used to consumers’ benefit or detriment. The report recommends that Congress consider enacting legislation to provide consumers with reasonable access to information about them held by data brokers and, in certain cases, the ability to correct such information and opt out of further information collection.

Notably, the FTC’s findings and recommendations clearly draw distinctions between different data broker activities and vary depending on the product categories at issue – for example, marketing, risk mitigation, and people search. These distinctions highlight the FTC’s sensitivity to different uses of data and provide a roadmap for the reforms it would like to see in the industry, including new disclosure obligations by consumer-facing companies that use data broker information.

Data broker legislation is active both in California and the Congress; businesses covered in this report should pay close attention to how the report’s findings impact the ongoing legislative debate and future regulatory and enforcement activities by the FTC.